IS THERE LIFE AFTER… OIL?

In order to avoid "Dutch disease" in Azerbaijan, attention has long been paid to the development of the non-oil sector, mainly in the regions of the country, since this can help it to eliminate poverty and become a rich, oil-producing nation. There are many state programmes to develop the various industries and spheres of agriculture in the regions. The list of documents of strategic importance is headed by, "the state programme on the socioeconomic development of the regions (2004-2008)" which was signed by Azerbaijani President Ilham Aliyev in February 2004. The main objective of the programme is to develop individual spheres of the economy in the regions by making rational use of the available potential, expanding the work of industrial enterprises, stimulating the production of export goods, raising living standards by means of developing local entrepreneurship and increasing the level of employment.

With this in mind, the government has set itself a number of tasks. It aims to restore the work of non-operating enterprises and set up new enterprises, make effective use of local resources, create and develop the infrastructure, speed up the second stage of reforms in the country's agrarian sector, create favourable conditions for investment, create new jobs and improve the quality of public utilities. As we know, the state programme covers 10 economic districts of Azerbaijan. Much time has lapsed since the document was adopted, but what has been done in the past three years, what problems still have to be solved and what else needs to be done? The head of the regional development department of the Azerbaijani Cabinet of Ministers, Nizami Mustafayev, touched on these questions in an interview with R+.

- So let's begin with the statistics. What are the results of this programme in figures?

- I think the figures will impress the readers of your journal. It is enough to say that since the programme was adopted, more than 18,240 new enterprises have been opened and 572,000 new jobs have been created in the country. More than 40 per cent of them were created in the regions.

According to official statistics, during this period 11,880 km of power lines and cables and 1,094 km of gas pipelines were laid, 146 km of water pipelines, 255 km of sewage lines and 176 km of thermal networks were built, 69 artesian and 190 sub-artesian wells were drilled, 3,219 km of roads were resurfaced or repaired, 143 schools with 61,806 places, 1,738 additional classrooms with 34,760 places and 11 kindergartens with 1,370 places were built, and nine modern medical-diagnostic centres (sponsored by the State Oil Company) and 12 hospitals were built and put into operation in the regions. Disabled people and martyrs' families were given flats in 87 apartment blocks. Seven sports and health centres, as well as 22 Olympic and seven sports and health complexes were built for disabled people.

We must mention the work of the Heydar Aliyev Foundation, which has focused on the construction and material-technical equipment of schools and pre-school institutions. Under the slogan, "New schools for a new Azerbaijan", the foundation has built about 300 new schools, boarding schools and children's homes with its own money. Moreover, the foundation has supplied new and existing institutions of education and libraries with computers and the necessary tools for interactive education, created medical and psychological rooms, put forward a package of proposals to update meal provision and so on. The foundation is also planning to create a centre for the social-psychological rehabilitation of pupils of children's homes and boarding schools. This is a great achievement.

- There is a construction boom in Baku at the moment. New buildings, bridges and administrative offices are being built. Has it affected the regions of the country as well?

- Indeed, if you look at Azerbaijan from above, its regions look more like large construction sites. Forty facilities of various kinds have been built here since the programme was adopted.

President Ilham Aliyev has taken part in ceremonies to open and lay the foundations of important facilities of the production and socio-cultural infrastructure. Among them are the Astara, Saki, Xacmaz and Baku module power stations, the Imisli sugar factory, the Salyan milk processing factory, the international airport and chocolate plant in Ganca, medical-diagnostic centres in Naxcivan and Lankaran, the Quba-Ispik-Xinaliq and Samkir-Qazax roads, a coach station, an apartment block and a village hospital (in the village of Qaziqumlaq) and school No 2 in Ucar, an Olympic sports complex in Zaqatala, a gas pipeline in Lerik, a secondary school in Daskasan, a boarding school in Ordubad and so on.

From both an economic and geographical point of view, the development programme is extensive. We should point out that the infrastructure being created in the regions meets world standards, thanks to the efforts of contractors, designers and builders. As a rule, we knock down incomplete or old buildings, unsafe buildings and lay out well-designed gardens and parks.

- It is known that apart from one large-scale programme, there are also such documents covering individual regions of the country...

- That's absolutely right. Following the head of state's visits to regions in 2005 and 2006, the president issued eight decrees in respect of almost all economic zones where additional measures are planned and money has been allocated for investment in projects. The presidential decrees and edicts issued in the period after the adoption of the regional development programme and more than 20 legal acts, have made it possible to improve the legislative base, make radical changes in the socioeconomic life of the republic and stimulate the development of the regions.

At the same time, most attention has been paid to the country's border districts. Visiting them and expressing his concern about their problems, the head of state issued additional instructions to build roads, health centres and institutions of education, culture and other activities. He stressed that it is necessary to create the most up-to-date infrastructure in these districts. One of these districts is Balakan, where the foundations of a central hospital with 235 beds were laid in April 2006; Agstafa, where the Azerbaijani company Karvan-Yel and a Romanian company are building a furniture factory and where a factory of high vitamin forage is also being built; Astara, where the foundations of the first modular power station in the country have been laid and a gas compressor station to supply Iranian gas to Naxcivan and a cannery in the village of Telmankand have also been built; Qusar where a veterans' home has been refurbished and the foundations of an Olympic sports complex were laid two years ago.

- Despite all this, provincial businessmen find it much more difficult to develop their businesses, as their financial resources are quite restricted…

- Yes, of course, there is such a problem. However, we have to bear in mind that more than 90 per cent of capital investment from the National Fund to Assist Entrepreneurship was made in the development of manufacturing and processing industries, agriculture and tourism in the regions. In 2006 alone, capital investment increased by 96.7 per cent compared to 2002. The lion's share of loans has been spent on projects submitted from the regions. In three years, the National Fund to Assist Entrepreneurship allocated 145 million manats to 5,312 business entities, financing 5,385 projects.

What is more, the development of the country's regions is directly linked to foreign investment. Among foreign investors we can highlight the World Bank, the European Bank for Reconstruction and Development, the Islamic Development Bank, the Asian Development Bank, the OPIC international development fund, the Japan Bank for International Cooperation, the German Development Bank (KfW) and others. In three years, investments worth 18.7 billion manats (19.8 billion dollars) have been made in the development of the economic and social spheres from all financial sources. From domestic sources, the volume of investments totalled 6.1 billion manats and from foreign sources - 12.6 billion manats.

Owing to the favourable investment climate in the country, foreign investors direct their money mainly towards the priority sectors of the economy and social services - projects to restore, reconstruct and develop the infrastructure. These are projects to improve the environment, restore the infrastructure of irrigation and draining systems, restore water supplies and sewage systems in cities and districts of the country, develop and finance agriculture, reconstruct roads, develop the fuel-energy complex, build social infrastructure facilities for displaced persons and to render technical assistance to the management structures of various sectors (energy, thermal and other sectors).

As we know, the state programme expires in 2008. Everything that the Azerbaijani government has planned will definitely be implemented. Ministries and departments are already working on a major programme as part of the national strategy to develop the regions of the country over the next five years.